CS Credit Suisse Group

China's state-owned grain trading company Cofco Corp. said Tuesday it would take full ownership of Netherlands-based grain trader Nidera NV.

Cofco said it reached a "definitive agreement" to buy the 49% it didn't already own from Cygne BV, a company controlled by the family that founded Nidera. The deal is expected to be completed in the fourth quarter, subject to regulatory approvals, Cofco said.

The price wasn't disclosed. Cofco bought the initial 51% in 2014 at a reported equity valuation of $2.4 billion. Nidera posted its first loss in five years in 2015 after a rogue trader incurred losses of around $200 million in the biofuels market.

"Our combination enlarges the playing field and opens up new opportunities that were previously closed to us as separate companies, but that we can now pursue together," said Matt Jansen, chief executive of Cofco International and Cofco Agri.

The deal closely follows the pattern of Cofco's acquisition of another big player in the global agricultural commodities market. It bought 51% of the agricultural arm of Singapore-listed Noble Group Ltd. in 2014, then bought the remainder in December last year].

As well as strengthening Cofco's grip over the supply-chain that helps feed China's growing and increasingly wealthy population, taking full control of both companies is a step along the road toward its long-term objective of an initial public offering for the business.

The expansion of China's increasingly urbanized middle class has left it reliant on food grown abroad. In 2005 China imported 609,000 metric tons of rice, according to the U.S. Agriculture Department. And by last year, imports had exploded to a world-leading 4.7 million tons. To secure its food supply China has bought agricultural land from France to Australia and strengthened its position in commodity markets by buying trading firms.

Cofco said it would begin integrating Nidera with Cofco Agri—the former Noble business—as soon as the deal is completed. Nidera's sourcing and trading networks and its seeds business, which develops crop varieties and sells them in South America, complement the "strategic asset base" gained through the Noble deal, the company said.

Cygne BV was advised on the deal by Credit Suisse.

Write to Ed Ballard at ed.ballard@wsj.com

(END) Dow Jones Newswires

August 23, 2016 08:25 ET (12:25 GMT)

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